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UM COVERAGE - BAILEY V. PROGRESSIVE SPECIALTY INS. CO.

In Bailey v. Progressive Specialty Ins. Co., [Ms. 1081801, Apr. 29, 2011] __ So. 3d __(Ala. 2011), the Supreme Court affirmed summary judgment for defendant Progressive in an automobile accident case between the plaintiff Bailey, and an uninsured driver who fled the scene of the accident. Bailey had an automobile insurance policy with Progressive that provided uninsured motorist coverage. Bailey filed suit against the uninsured motorist and timely informed Progressive of the filing of that action. Progressive then filed a motion to intervene in the action to evaluate its exposure for possible UM benefits owed to the plaintiff. The trial court granted Progressive's motion to intervene. Subsequently, the trial court granted Bailey a default judgment against the uninsured motorist who failed to appear and a hearing established that Bailey suffered $125,000.00 worth of damages. Progressive then moved to set aside the default judgment and for a declaration that the amount of damages was not binding against Progressive. The trial court denied Progressive's motion to set aside the default judgment, but entered an order that held, in part, that the default judgment was not binding against Progressive. Bailey then filed a supplemental complaint against Progressive pursuing a breach of contract theory and bad faith claims based on the amount of the damages established in the default judgment. Progressive filed a motion for summary judgment against Bailey with regard to the claims in Bailey's supplemental complaint. The trial court granted summary judgment in favor of Progressive. On appeal, the Supreme Court discussed at length the proper procedure for pursuing underinsured motorist claims. The Court held that Progressive had a right to defend its own interest and that Bailey, after obtaining a default judgment, had the right to prosecute her claim on the merits against Progressive. However, Bailey failed to pursue her claim against Progressive on the merits. Instead, Bailey attempted to force Progressive to pay the damages established in the default judgment. The Court held that Bailey's claim was not cognizable since the trial court had already determined the damages established in the default judgment were not binding against Progressive. Accordingly, the Court affirmed the trial court's dismissal of the claims against Progressive.

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